For IFRS: They are asking about pension expense. It seems they interchanged the wording here with pension cost or net pension asset/liability. I am somewhat confused what you actually call the item (cost, net asset/liab.). But I don’t see why actual pension expense: (service cost+i. cost - expected returns +/- amort of deferred + amort of past service cost) would be different under IFRS vs. GAAP. I maybe just getting to picky here, but I want to be absolutely clear on this. Thanks.
Under IFRS, companies can recognize actuarial gains and losses in the income statement or in OCI in Equity. Under GAAP, it’s only on the income statement, and they are included in the single line item (GAAP and IFRS also differ on presentation). Also, under both IFRS and GAAP, companies can choose to use either the corridor method (<10%) or the faster recognition method to recognize actuarial gains & losses. As a side note, if the firm uses either the corridor method or faster recognition method, under GAAP, they do have the option to recognize the actuarial gains and losses in OCI in Equity. This sounds a little contradictory, but it’s not. These actuarial gains and losses arise from the use of either the corridor or faster recognition method. The reason the previously mentioned actuarial gains and losses are expense in the income statement as a part of pension expense (GAAP) is because they are occuring in the present period. Also, under GAAP, the pension expense can include the net transition asset/liability. This arose from transitioning to IFRS-like reporting. IFRS does not include this. Last, GAAP can report the Actual ROA (not expected) as a part of its pension expense. I know this sounds weird, since we’re all used to seeing Expected ROA on pension expense, but look at pages 98-101 of the FSA CFAI books.